When I first started buying silver there are a few things that I know today, I wish I knew back then. One of those things is understanding the difference between a silver coin and silver round.
Silver coins are legal tender backed by a sovereign government. What exactly does that mean? Well, simply put, silver coins are money. They have a face value, (usually one or two dollars), and worth their weight in silver. An example of a silver coin is the American Silver Eagle. The coin is produced by the U.S. Mint and backed by the United States of America. On the obverse side, or front, of the coin is the Walking Lady Liberty and year produced; on the reverse side, or back of the coin, is the heraldic eagle. The coins weights one troy ounces or 31 grams. Thus silver coins demand a premium, or extra couple of dollars.
Pro’s: Silver coins are back by their government, they are easier to trade,
Con’s: Silver coins can get pricey
Silver Rounds are attached to the daily spot price. They do not have any monetary value, nor backed by a government. Thus, they do not have a dollar amount on the obverse or reverse side. They are simply a precious metal that look like silver coins produced by private mints. An example and personal favorite is the Silver Buffalo round. The value is strictly tied into the weight of silver measured by troy ounces. Silver rounds do not demand premiums, however can have a great detail like the Aztec Calendar Silver Round. The detail on that round is spectacular, however the value of silver is the exact same as the sliver Buffalo. They are both just an ounce of silver or 31 grams. They might as well be blank. However, mints can not make money off of blank silver so they create themes, license familiar products to stamp on the rounds, and even create silver rounds that look similar to silver coins. But in the end, it’s just a piece of silver attached to the daily spot price.
Pro’s: cost efficient, easy to trade, perfect for melting and pouring silver
Con’s: cost can sometime match premiums, gimmicky, easier to counterfit
Summary: Before I buy silver, I ask myself one question. Why am I buying? I buy Silver coins for near future trade. I research the best price possible, and buy silver coins with the idea of selling in the near future for a little profit or in need of emergency cash. Buying silver coins is a good way to save money, by one thinking about the extra steps one needs to go through to turn the silver into cash, and changing their mind.
As I mentioned earlier in this post, I wish I would of known the difference between Silver coins and Silver rounds when I first started collecting. Instead of randomly buying what I thought was very cool and unique silver coins, were just silver rounds that I overpaid for. However, depending on the reason why you are buying silver, (investing, collecting, melting, or extra income), you can now decide which is the best fit for you, or at least make this article a starting point to your own silver research.
Key words: spot price, obverse, premium